Options Trading News

January 29, 2014  Wed 12:05 PM CT

Cameron International has been stuck in a range ahead of tomorrow's earnings report, but one investor still expects a rally.

optionMONSTER's Heat Seeker monitoring program detected the purchase of about 9,900 March 60 calls for $1.85. A similar number of February 60 calls were sold at the same time for $1.15 against previous open interest. That suggests an existing position was closed and rolled forward in time at a cost of $0.70.

Long Calls lock in the price where shares can be purchased, providing cheap upside exposure for a specified period of time. Today's adjustment gave the investor an additional month to profit from a rally while protecting him or her from the quickening pace of time decay that will occur heading into February expiration. (See our Education section)

CAM is down 1.18 percent to $56.87 in afternoon trading. The oil-servicing stock spent most of the last year between $55 and $65 but has been trying to fight its way back from a big selloff in October. That drop resulted from a poor earnings report, and the company's next release is scheduled for tomorrow morning.

Total option volume is quadruple the daily average so far in the session, according to the Heat Seeker. Overall calls outnumber puts by a bullish 8.5-to-1 ratio.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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